From the very beginning, a central tenet of the supply chain philosophy has been integration. Initially, this meant integrating the various functional areas within the organization that worked on moving goods to market. These include sourcing and procurement, materials handling, transportation, warehousing, and so forth.

Then some forward-looking companies began to push the integration envelope beyond their own four walls. Manufacturers started working more closely with suppliers to reduce inventory build-up in the production process. Consumer goods companies began teaming up with their retail customers to develop replenishment strategies that more accurately reflected actual consumer demand.

Ten years after the supply chain management concept was introduced, integration remains the most critical issue—and one of the toughest challenges—a supply chain professional will face.

One of the biggest challenges of integration, writes Larry Smeltzer of Arizona State University, is figuring out how to embrace all of the supply chain partners in the process. If, as is typically the case, technology connects only the largest players while the smaller companies are left to struggle with manual processes, how efficient will that supply chain be? The answer: far less efficient (read more costly) than it would be if everyone—big and small—were integrated electronically.

An equally formidable yet largely overlooked challenge is how to integrate the demand and supply sides of the supply chain equation. Most companies tend to focus either on one or the other, notes University of Maryland educator Venkatesh Shankar. But if they can integrate the two activities, as leaders such as Dell Computer and Herman Miller have done successfully, they can reach new levels of profitability and asset return.

The practitioners' perspective on integration is well represented in this issue as well. For the supply chain professionals at IBM Worldwide Distribution-Americas, the integration initiative is looking both inward and outward. As IBM's Michelle Meyer reports, this group is working to link the company's information systems and the logistics processes. The objective is to create visibility and real-time access to information that will benefit IBM, its customers, and its suppliers alike.

At Hewlett-Packard (HP), the integration spirit is fully evident in the company's successful effort to apply supply chain analysis to a new product rollout. HP's supply chain analysts were able to show how a given design decision would affect a variety of inventory and logistics considerations. As a result of that analysis, the product rollout went smoothly and costs were minimized.

Reflecting on the first decade of supply chain management, one reality endures: Effective integration, both internal and external, needs to be a fundamental component of any company's go-to-market strategy.

617-558-4468, fquinn@cahners.com